Mexico’s Power Plant Plans Spell U.S. Opportunity

Beginning an energy push that will create major opportunities for U.S. companies, Mexico’s energy minister said Wednesday that the government will authorize 11 new power-generation plants this year in Mexico, including one near the Mexico-California border that will have “the highest priority.”

Energy Minister Jesus Reyes Heroles said at a news conference here that the location of the Baja California plant and others will be disclosed in two weeks. The Baja plant will cost $400 million and generate 440 megawatts, enough to serve 1 million households, sources said.

Sources close to Mexico’s energy planning process said the new plant will be in Mexicali, Rosarito Beach near Tijuana, or El Maneadero, about 15 miles south of Ensenada. Baja’s main power station, in Rosarito, about 20 miles south of the U.S. border, burns highly pollutive fuel oil.

Mexico, particularly in certain border areas, faces growing power shortages in coming years unless it can add capacity. Power demand is expected to grow at a 5% annual rate over the next decade, officials said, more than twice the U.S. rate.

The new plants are part of an ambitious plan announced by President Ernesto Zedillo on Monday to increase Mexico’s power generation by 27% by 2000 at a cost of $33 billion, a fifth of which would come from private investors and the rest from the Mexican government.

Two other power projects are possible for Baja: an expansion of Cerro Prieto, a huge geothermal facility near Mexicali, and a new facility midway between Mexicali and Tijuana to work in conjunction with a water pumping station, said Stephen Baum, chief executive of Enova Corp., the parent of San Diego Gas & Electric Co., which is gearing up to bid on Mexican energy projects.

The Ensenada location for a new plant is said to be gaining favor among some Mexican officials because the 90-mile natural gas trunk line it would require would bring power to a broader area of the state. It may also facilitate industrial development of Ensenada, for which the federal government has big plans, including a modernized port and a new rail link.

Reyes Heroles said the financing for the plants has yet to be decided but may be patterned after what is being worked out for Samalayuca, a 650-megawatt plant in Chihuahua state about 20 miles from the Texas border whose construction is scheduled to start this year.

A joint venture including Bechtel Corp., General Electric Co. and El Paso Natural Gas Co. will build the Samalayuca plant and then turn ownership over to Pemex, the state-owned petroleum monopoly, whose grip on energy in Mexico is slowly loosening. Executives at Bechtel and GE said they had no immediate comment on the energy minister’s remarks Wednesday.

The minister also said that bidding among companies to provide natural gas distribution to businesses and consumers in Mexicali, Baja California’s capital city, will begin next month. The project is to pipe gas in from sources in the southwestern United States.

The Mexicali project will be Mexico’s first natural gas development deal to go up for private bid. Until now, Pemex has monopolized Mexican natural gas distribution.

Staff writer Chris Kraul reported from San Diego and Times researcher Shasta Darlington reported from The Times’ Mexico City bureau.